Lon.fin&inv.grp Regulatory News (LFI)

2 Sep 2005 07:00

LONDON FINANCE & INVESTMENT GROUP P.L.C. Preliminary announcement of Unaudited results for the year ended 30th June 2005 IntroductionWe are an investment company whose assets primarily consist of three StrategicInvestments and a General Portfolio. Strategic Investments are significantinvestments in smaller UK quoted companies and these are balanced by a GeneralPortfolio, which consists mainly of investments in major U.K. and Europeanequities.At 30th June 2005, we held three Strategic Investments in which we have boardrepresentation: our associated company Western Selection P.L.C., MaryleboneWarwick Balfour Group Plc and Finsbury Food Group plc. Detailed comments on ourStrategic Investments are given below.Our objective is to achieve capital growth in real terms over the medium term,while maintaining a progressive dividend policy.ResultsThe Group made a profit before tax for the year of ‚£202,000 (2004 - ‚£208,000).Our operating profits have increased from ‚£141,000 to ‚£228,000 as a result ofhigher profits realised on sales of investments and increased dividend income.Our profit after tax and minority interest was ‚£212,000 (2004 - ‚£190,000)giving earnings per share of 0.81p (2004 - 0.74p).To reflect the improvement in the earnings and our progressive dividend policy,the Board has decided to increase the dividend for the year to 1.0p per share(2004 - 0.9p).Our net assets per share have increased 23% to 44p at 30th June 2005 from 36plast year. Our Strategic Investments have increased in value by 31% and ourGeneral Portfolio by 10% after taking into account additions and disposals ofinvestments. This compares with the increase in the FTSE 100 index of 15% andthe FTSE Eurotop 300 index of 14% over the year.Strategic InvestmentsWestern Selection P.L.C. ("Western")The Company owns 4,402,982 shares, being 40.48% of the issued share capital,and 809,518 warrants, of Western. On 31st August 2005, Western announced aprofit after tax of ‚£153,000 for its year to 30th June 2005, earnings per shareof 1.40p (2004 - 2.84p), and a 5% increase in dividend to 2.32p (2004 - 2.20p).Western's net assets at market value were ‚£9.4 million, equivalent to 86.5p pershare, a fall of 7% from 92.7p last year. The fall in value of Western duringthe year is due to a significant fall in the value of its investment in TheSanctuary Group plc, following a profit warning by that company. Sanctuary usedto be a strategic investment of Western's and 3.5 million shares still owned atthe time of the profit warning and at 30th June 2005 have subsequently beensold at the year end balance sheet value. During the six year course ofWestern's involvement it realised a substantial profit on this investment.The market value of the Company's investment in Western at 30th June 2005 was ‚£2.4 million and the book value was ‚£4.1 million. At market value thisrepresents 21% of the net assets of Lonfin. The underlying value of theCompany's investment in Western, valuing Western's investments at market value,was ‚£3.9 million (2004 - ‚£4.1 million).I am the Chairman of Western and Mr. Robotham is a non-executive director.Western has strategic investments in Creston plc, Swallowfield plc andIndustrial & Commercial Holdings PLC. An extract from Western's announcement ofits strategic investments is set out below: Creston plc Creston is a marketing services group whose strategy is to grow within its sector both by organic growth and through selective acquisition to become a substantial diversified international marketing services group. The results for the year to 31st March 2005, show a profit after tax of ‚£ 2,640,000 (2004 - ‚£1,449,000), equivalent to earnings of 10.7p per share (2004 - 9.0p). At 1st July 2004, Western owned 2,000,000 shares in Creston. During the year we acquired an additional 873,998 shares at a cost of ‚£1,224,141 as a result of the exercise of our warrants and participation in Creston's fundraising to bring our total holding to 2,873,998 shares, being 8.2% of Creston's issued share capital. The market value of the Company's holding in Creston on 30th June 2005 was ‚£4,455,000 (2004 - ‚£2,620,000), being 47% of Western's net assets. Swallowfield plc Swallowfield has a long history of developing and producing aerosol, cosmetic and toiletry products stretching back to 1950. As one of Europe's premier contract manufacturers of toiletries and cosmetics it offers an unrivalled breadth of product capabilities. Its skill in design, developing and producing gift packs and themed product ranges compliments its production capability. Swallowfield's latest published results were for the 28 weeks to 8th January 2005 and showed a profit of ‚£431,000 (28 weeks to 10th January 2004 - ‚£263,000). Industrial & Commercial Holdings plc ICH is a small unlisted PLC in which Western holds 29.9%. It holds land pending planning permission for housing at Milngavie, adjacent to Dougalston golf course, just north east of Glasgow. As it may take many years for the development to progress, we are in discussion with the board of ICH to consider an acquisition of an active business. Marylebone Warwick Balfour Group Plc ("MWB")The Company owns 3,000,000 shares in MWB, representing 2.73% of its issuedshare capital. The market value at 30th June 2005 was ‚£3.2 million, comparedwith the book value of ‚£2.5 million, and represents 28% of the net assets ofLonfin.MWB is in the process of maturing and realising its assets for the benefit ofall stakeholders through an orderly disposal programme, which is under constantreview.Both Mr Robotham and I are non-executive directors of MWB.Finsbury Food Group plc ("Finsbury Food")During the year we acquired a further 300,000 shares in Finsbury Food at a costof ‚£100,000 to bring our holding, at 30th June 2005 to 4,800,000 shares and3,000,000 warrants representing 21.59% of their share capital and 47.03% oftheir warrants. The market value of our holding was ‚£3.2 million on 30th June2005 (cost - ‚£847,000) and represents 28% of the net assets of Lonfin.Finsbury Food's main subsidiary, Memory Lane Cakes, is a supplier of boxedambient cakes to most of the UK's major supermarket chains, which include Asda,Morrisons, Sainsbury, Somerfield, Tesco and Waitrose. Ambient cakes are bakedcakes that have not been frozen and are generally retailed at room temperature.Finsbury Food has now repositioned itself as a speciality foods businessfocused on niche markets. Its directors believe that the UK food sector isincreasingly polarised between substantial manufacturers and a large number ofsmaller independent businesses and that, in this environment, opportunitiesexist to acquire and develop profitable niche businesses. Finsbury Food'sdirectors, of which I am one, continue to monitor the sector and seek furthersuitable acquisitions.General PortfolioThe General Portfolio has material interests in Oil, Natural Resources,Pharmaceuticals and Healthcare, Banking, Food and Beverages. These sectorsaccounted for 73% of the portfolio by value at 30th June 2005 (76% at 30th June2004). We believe that the companies in these sectors in which we have investedhave the potential to outperform the market in the medium to long term.The number of holdings in the General Portfolio has increased to 39 from 36. Wehave invested ‚£114,000 (2004 - ‚£124,000) in the General Portfolio over the yearand the average value of each holding has increased from ‚£102,000 to ‚£110,000.We have a ‚£2 million bank facility and at 30th June 2005 had drawn down ‚£1.6million. This leaves ‚£400,000 available for further investment when the Boardfeels appropriate; together with the ‚£936,000 we anticipate receiving duringOctober on the final date of exercise of our remaining outstanding warrants.The year aheadDespite weak consumer demand, we remain confident in the underlying strength ofthe U.K.'s equity markets and will utilise the balance of our availablefacilities both cautiously and "stock specific". Since our year end, the stockmarkets have had a good run and, at the time of writing, our net asset valuehas moved up to 51.94p from 44.05p at 30th June 2005. Barring unforeseencircumstances, your Directors intend to maintain the dividend in the yearahead.D.C. MARSHALLChairman2nd September 2005 Unaudited Consolidated Profit and Loss AccountFor the year ended 30th June 2005 2004 ‚£000 ‚£000 Operating Income Investment operations 572 407 Management services 501 533 Administrative expenses Investment operations (294) (281) Management services (551) (518) -------- -------- Operating profit 228 141 Share of result of associated undertaking 90 139 Interest payable (116) (72) -------- -------- Profit on ordinary activities before taxation 202 208 Tax on result of ordinary activities (12) (9) -------- -------- Profit on ordinary activities after taxation 190 199 Equity minority interest in subsidiary 22 (9) -------- -------- Profit attributable to members of the holding company 212 190 Proposed dividend (262) (233) -------- -------- Retained loss for the financial year (50) (43) ===== ===== Basic earnings per share 0.81p 0.74p Headline earnings per share 0.81p 0.74p Diluted earnings per share 0.80p 0.73p There are no other recognised gains or losses. Unaudited Consolidated Balance Sheetat 30th June 2005 2004 ‚£000 ‚£000 Fixed Assets Tangible assets 431 437 Investments 7,455 7,390 -------- -------- 7,886 7,827 -------- -------- Current Assets Listed investments 3,534 3,077 Debtors 178 272 Bank balance and deposits 48 30 -------- -------- 3,760 3,379 Current Liabilities Creditors: falling due within one year (2,089) (1,655) -------- -------- Net Current Assets 1,671 1,724 -------- -------- Total Assets less Current Liabilities 9,557 9,551 ===== ===== Capital and Reserves Called up share capital 1,310 1,295 Share premium account 1,095 1,033 Reserves 361 361 Profit and loss account 6,730 6,780 -------- -------- Equity shareholders' funds 9,496 9,469 Minority equity interests 61 82 -------- -------- 9,557 9,551 ===== ===== Unaudited Consolidated Cash Flow StatementFor the year ended 30th June 2005 2004 ‚£000 ‚£000 Cash outflow on operating activities (244) (479) -------- -------- Returns on investments and servicing of finance Dividends received 277 246 Interest paid (89) (60) -------- -------- Net cash inflow from returns on investments and servicing 188 186 of finance -------- -------- Taxation (15) (9) -------- -------- Investing activities Purchase of tangible fixed assets (4) - Purchase of fixed asset investments (101) - -------- -------- Net cash outflow from investment activities (105) - ===== ===== Equity dividend paid (233) (218) Financing Share capital issued 77 72 Net draw down of loan facility 350 450 -------- -------- Net cash inflow from financing 427 522 -------- -------- Increase in cash 18 2 -------- -------- Notes1 . The dividend for the year of 1 .0 p per share (2004 - 0.90 p) will be paid on 7th October 2005 to shareholders on the register on 16th September 2005 . 2 . Earnings per share are based on the result of ordinary activities after taxation and minority interests and on 26,113,943(2004- 25,809,406) being the weighted average of the number of shares in issue during the year. 3 . The net assets attributable to shareholders, taking investments at market value, are before providing for any tax that may arise on realisation. 4 . The financial information in this preliminary announcement of unaudited group results, which has been reviewed and agreed by the auditors, does not constitute statutory accounts within the meaning of section 240(5) of the Companies Act 1985. The accounts have been prepared in accordance with the Accounting Standards of the Auditing Practices Board of the United Kingdom and are consistent with those applied in the previous financial year. The audited accounts of the group for the year ended 30 th June 2004 have been reported on with an unqualified audit report in accordance with section 235 of the Companies Act 1985 and have been delivered to the Registrar of Companies. 5 Changes in Equity 2005 2004 ‚£000 ‚£000 Profit for the financial year 212 190 Proposed dividend (262) (233) Shares issued during the year 77 72 ---------- ---------- 27 29 Opening equity shareholders' funds 9,469 9,440 ---------- ---------- Closing equity shareholders' funds 9,496 9,469 ---------- ----------ENDLONDON FINANCE & INVESTMENT GROUP PLC